Friday, August 10, 2007

As a research organization focused on local issues, the Public Policy Forum hasn’t taken up the issue of climate policy, but perhaps we should.The City of Boulder, Colorado, has determined that climate change is a local issue, and has instituted a comprehensive Climate Action Plan.

Boulder’s efforts began in 2002 when the city council endorsed the Kyoto Protocol and adopted the goal of reducing carbon emissions to 7% less than 1990 levels by 2012.(This equates to a 19% reduction from 2005 levels.)The next year the city manager used $100,000 of his contingency fund to conduct an emissions inventory, which found that 54% of the carbon emissions from Boulder were due to electricity use, 15% from natural gas use, 27% from vehicle fuel, and 4% from escaping landfill gases.The decision was made to create a Climate Action Plan to outline greenhouse gas reduction programs the city would promote, support, or implement.In 2004 and 2005, $258,000 was appropriated in each year for planning.These appropriations came from an increase in the tax charged to private trash collectors.As the planning process came to an end and some small programs were put in place, the city council had to determine how to fund the comprehensive plan and the implementation of large scale programs.

The result of the debate was a proposed tax on energy use, dubbed the carbon tax.Because of the Taxpayer Bill of Rights (TABOR) provision in Colorado’s constitution, the new tax had to be approved by the voters, which it was in November 2006 by a 60-40 margin.The carbon tax is used to fund staff to develop and implement emission reduction programs and to conduct public education.The tax applies to all energy users, both residential and commercial, but does not apply to vehicle fuels (which are taxed by the state) or to use of renewable energy sources such as wind or solar power.The tax is expected to bring in about $1 million per year until it sunsets in 2012, at which time the city hopes to have met its emission reduction goal.The tax is estimated to add about 1% to a homeowner’s energy bill, or about $16 per year per household.The local utility collects the tax and partners with the city in programming and public education efforts.

It should be noted that “carbon tax” may be a misnomer, as it is not a tax designed to act as an incentive to reduce energy use.It is, in reality, an excise tax on energy consumption and is not designed to tax at a high enough rate to change consumer behavior.It is designed as a new revenue stream to fund new city programs under the Climate Action Plan.However, the city council endorsed the carbon tax nomenclature in order to make a more explicit connection in consumers’ mind between energy use and carbon emissions.

The current programs funded by the carbon tax include:

Reduction of residential emissions

Home weatherization for low-income residents

Residential energy audits at low or no cost to homeowners

Door-to-door public education campaigns

Multi-family unit energy and water conservation audits (As home to the University of Colorado, Boulder has a large student population and half of its residential units are rentals.)

Among other things, the plan also calls for municipal use of solar energy, solar rebates for homeowners, dedicated capacity on transmission lines for renewable energy, and decreasing vehicle miles and/or emissions. Currently under discussion is whether to renew the utility’s franchise when it expires or to have the municipality act as the utility, buying power on the open market.